NOT IMCOMPLETE - JUST READ AND LOOK ATTACHMENTS. Allowance Method for Doubtful Accounts Averys All-Natural Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Averys All-Natural prepared the following aging-of-receivables schedule as of the end of business on December 31, 20Y7: Days Past Due Customer Balance Not Past Due 1–30 31–60 61–90 91–120 Over 120 AAA Beauty 27,500 27,500 Amelia's Wigs 3,750 3,750 Zim’s Beauty 1,650 1,650 Totals 1,100,000 750,000 180,000 75,000 45,000 22,000 28,000 Averys All-Natural Company has a past history of uncollectible accounts by age category, as follows: Age Class Percent Uncollectible Not past due 1 % 1–30 days past due 3 31–60 days past due 7 61–90 days past due 16 91–120 days past due 40 Over 120 days past due 90 Instructions: please look at screen shots attached to see 1-5 answered. This is not incomplete! you just have to read it and not skim through. 6. Assume that instead of using the allowance method, Averys All-Natural uses the direct writeoff method. Illustrate the effect on the accounts and financial statements of the following: a. The write-off of the Superior Images account on March 4, 20Y8. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Statement of Cash Flows Balance Sheet Assets = Liabilities + Stockholders' Equity + = + 20Y8 Mar. 4 fill in the blank 66 fill in the blank 67 fill in the blank 68 fill in the blank 69 Statement of Cash Flows Income Statement fill in the blank 71 fill in the blank 73 b. The (1) reinstatement and (2) collection of the Superior Images account on August 17, 20Y8. (1) reinstatement If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Statement of Cash Flows Balance Sheet Assets = Liabilities + Stockholders' Equity + = + 20Y8 Aug. 17 fill in the blank 78 fill in the blank 79 fill in the blank 80 fill in the blank 81 Statement of Cash Flows Income Statement fill in the blank 83 fill in the blank 85 (2) collection If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Statement of Cash Flows Balance Sheet Assets = Liabilities + Stockholders' Equity + = + 20Y8 Aug. 17 fill in the blank 90 fill in the blank 91 fill in the blank 92 fill in the blank 93 Statement of Cash Flows Income Statement fill in the blank 95 fill in the blank 97

NOT IMCOMPLETE - JUST READ AND LOOK ATTACHMENTS. Allowance Method for Doubtful Accounts Averys All-Natural Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Averys All-Natural prepared the following aging-of-receivables schedule as of the end of business on December 31, 20Y7: Days Past Due Customer Balance Not Past Due 1–30 31–60 61–90 91–120 Over 120 AAA Beauty 27,500 27,500 Amelia's Wigs 3,750 3,750 Zim’s Beauty 1,650 1,650 Totals 1,100,000 750,000 180,000 75,000 45,000 22,000 28,000 Averys All-Natural Company has a past history of uncollectible accounts by age category, as follows: Age Class Percent Uncollectible Not past due 1 % 1–30 days past due 3 31–60 days past due 7 61–90 days past due 16 91–120 days past due 40 Over 120 days past due 90 Instructions: please look at screen shots attached to see 1-5 answered. This is not incomplete! you just have to read it and not skim through. 6. Assume that instead of using the allowance method, Averys All-Natural uses the direct writeoff method. Illustrate the effect on the accounts and financial statements of the following: a. The write-off of the Superior Images account on March 4, 20Y8. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Statement of Cash Flows Balance Sheet Assets = Liabilities + Stockholders' Equity + = + 20Y8 Mar. 4 fill in the blank 66 fill in the blank 67 fill in the blank 68 fill in the blank 69 Statement of Cash Flows Income Statement fill in the blank 71 fill in the blank 73 b. The (1) reinstatement and (2) collection of the Superior Images account on August 17, 20Y8. (1) reinstatement If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Statement of Cash Flows Balance Sheet Assets = Liabilities + Stockholders' Equity + = + 20Y8 Aug. 17 fill in the blank 78 fill in the blank 79 fill in the blank 80 fill in the blank 81 Statement of Cash Flows Income Statement fill in the blank 83 fill in the blank 85 (2) collection If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Statement of Cash Flows Balance Sheet Assets = Liabilities + Stockholders' Equity + = + 20Y8 Aug. 17 fill in the blank 90 fill in the blank 91 fill in the blank 92 fill in the blank 93 Statement of Cash Flows Income Statement fill in the blank 95 fill in the blank 97

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

NOT IMCOMPLETE - JUST READ AND LOOK ATTACHMENTS.

Allowance Method for Doubtful Accounts

Averys All-Natural Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Averys All-Natural prepared the following aging-of-receivables schedule as of the end of business on December 31, 20Y7:

					Days Past Due
Customer	Balance	Not Past Due	1–30	31–60	61–90	91–120	Over 120
AAA Beauty	27,500		27,500
Amelia's Wigs	3,750					3,750
Zim’s Beauty	1,650				1,650
Totals	1,100,000		750,000		180,000	75,000	45,000	22,000	28,000

Averys All-Natural Company has a past history of uncollectible accounts by age category, as follows:

Age Class	Percent Uncollectible
Not past due		1	%
1–30 days past due		3
31–60 days past due		7
61–90 days past due		16
91–120 days past due		40
Over 120 days past due		90

Instructions:

please look at screen shots attached to see 1-5 answered. This is not incomplete! you just have to read it and not skim through.

6. Assume that instead of using the allowance method, Averys All-Natural uses the direct writeoff method. Illustrate the effect on the accounts and financial statements of the following:

a. The write-off of the Superior Images account on March 4, 20Y8.

If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

Statement of Cash Flows	Balance Sheet
Assets	=	Liabilities	+	Stockholders' Equity
	+		=		+
20Y8 Mar. 4	fill in the blank 66		fill in the blank 67		fill in the blank 68	fill in the blank 69
Statement of Cash Flows		*Income Statement*
	fill in the blank 71			fill in the blank 73

b. The (1) reinstatement and (2) collection of the Superior Images account on August 17, 20Y8.

(1) reinstatement

If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

Statement of Cash Flows	Balance Sheet
Assets	=	Liabilities	+	Stockholders' Equity
	+		=		+
20Y8 Aug. 17	fill in the blank 78		fill in the blank 79		fill in the blank 80	fill in the blank 81
Statement of Cash Flows		*Income Statement*
	fill in the blank 83			fill in the blank 85

(2) collection

If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

Statement of Cash Flows	Balance Sheet
Assets	=	Liabilities	+	Stockholders' Equity
	+		=		+
20Y8 Aug. 17	fill in the blank 90		fill in the blank 91		fill in the blank 92	fill in the blank 93
Statement of Cash Flows		*Income Statement*
	fill in the blank 95			fill in the blank 97

4.
Balance Sheet
Stockholder Equity
Income Statement
Allowance for Doubtful
Accounts
Retained earning
Bad Debt Expense
Accounts
Receivable
($2,950)
($2,950)
No Effect
No Effect
Step 3
5.
Stockholder
Income
Balance Sheet
Cash Flow
S. No.
Equity
Statement
Allowance for
Doubtful Accounts
Accounts
Retained
Bad Debt
Cash
Receivable
earning
No Effect
Expense
$2,950
$2,950
($2,950)
a.
No Effect
b.
$2,950
$2,950
$2,950
$2,950
$2,950

1. Estimate the allowance for doubtful accounts, based on the aging-of-receivables schedule.
59,350 V
2. Assume that the allowance for doubtful accounts for Averys All-Natural Company has a negative balance of $(2,250) before adjustment on December 31, 20Y7. Illustrate the effect on the accounts and financial statements of the adjustment for
uncollectible accounts.
If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.
Balance Sheet
Statement of
Assets
Liabilities
Stockholders' Equity
Cash Flows
Allowance for doubtful accounts v
No effect v
No effect v
Retained earnings v
+
20Y7 Dec. 31
57,100 V
-57,100 v
Statement of Cash Flows
Income Statement
No effect v
Bad debt expense v
57,100
V
3. Averys All-Natural Company reported credit sales of $2,400,000 during 20Y7. Assume that instead of using the analysis of receivables method of estimating uncollectible accounts, Natural Hair Company uses the percent of sales method and
estimates that 2.5% of sales will be uncollectible. Illustrate the effect on the accounts and financial statements of the adjustment for uncollectible accounts using the percent of sales method.
If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.
Balance Sheet
Statement of
Assets
Liabilities
+
Stockholders' Equity
Cash Flows
No effect v
No effect v
Retained earnings
v
+
20Y7 Dec. 31
-60,000
-60,000 v
Statement of Cash Flows
Income Statement
No effect v
Bad debt expense v
-60,000 v

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